Hecla Mining's Fire At Lucky Friday Mine Causes More Damage Than Expected: Analyst

Roth MKM analyst Joe Reagor reiterated a Neutral rating on Hecla Mining Company HL, lowering the price target from $4.50 to $4.00.

The analyst cautions that the impact of the fire at the Lucky Friday Mine was significantly greater than anticipated.

On September 18, 2023, Hecla Mining provided an update on the previously announced fire at the Lucky Friday Mine. The update indicated that while the fire has been extinguished and normal ventilation has been restored, the mine would not resume production this year.

Instead, the company is focused on developing a secondary egress in the damaged portion of the shaft, notes the analyst. 

The new egress requires installing a 1,600-foot-long ramp and a 290-foot-long manway raise.

Because of the damages caused by the fire, the analyst removed all production from the model from August through to the end of 2023. 

On a positive note, the company reported it has $50 million in property insurance that should cover both the damage and the business interruption, less a deductible, Reagor adds. 

However, it is still being determined if the insurance would cover the new egress development, notes the analyst.

For FY23, the analyst cut revenue estimates to $711.5 million from the previous view of $770.2 million. the analyst expects FY23 EPS of $(0.06) loss, wider than prior view of $(0.04) loss.  

For FY24, the analyst sees revenue of $712 million, with EPS of $0.01.

Price Action: HL shares are trading lower by 4.18% to $4.0150 on the last check Tuesday.